Makes sense.  Thanks. ... View more

@Amiralinda  @Opus 17  Now for an intriguing follow-up question.  Once I came to grips with NOT being able to exclude FSA income on my son's return, thereby adding that money back to taxable income, the next question is whether you need to identify those parties to which you paid dependent care (Part 1 of the form).  Originally, I had filled out that section, assuming those costs would be excluded.  When TT would not allow this and I finally accepted this, I then started over and noticed TT left Part 1 blank.  When I tried to add the names of dependent care providers, it looked like TT did not like this.  In any event, I left Part 1 blank and TT let this sail through the Error Check.  So that's how I submitted the form electronically with the tax return - Part 1 blank, and Part 3 showing a portion being taxable and a portion carried over into 2021 (and presumably ultimately taxable in 2021). So my question is whether that is correct to leave Part 1 blank and NOT name child care providers.  My instinct says that should be correct because you are not excluding the FSA money, so you have paid tax on it and, therefore, do not need to show the money trail for those FSA funds.  Do you agree? All and all, what a phenomenal waste of time trying to take advantage of a fictitious minor tax break.  This "non-deduction" probably cost in time spent substantially more than the potential tax savings ... View more

The care must be for a qualifying person and Pub 501 defines qualifying person and specifically says the non-claiming parent can't exclude dependent care expenses. ... View more

@Amiralinda   Further to what @Opus 17  said, if you meet the qualifications for meeting the "unmarried" exception and check the box on the 2441 form that says you meet those qualifications for being "unmarried", then I presume the TT form will work for you and permit you to exclude the FSA money from income. Believe me, I ran into the same problem on my son's tax return and debated mightily with Opus 17, including citing the same provisions as you.  Frankly, it makes no sense.  It was only when I stumbled on the section of Pub 501 that I finally gave in.  And as I said, it is particularly idiotic when one realizes you elect to participate in an FSA program 15 months prior to knowing your actual tax status.  And to add insult to injury, by the time you realize the hopeless situation you are in, you are already well into the next year's FSA program, and such programs don't let you opt out mid-year. ... View more

@Amiralinda   I was in full agreement with you, until I read Pub 501 reproduced below.  Apparently, if you file MFS and don't claim the child as a dependent, then you can't obtain the tax benefit of using an FSA.  It really doesn't make any sense, but that seems to be the situation.  It totally messed up my son, who contributed to an FSA, then used the funds to pay for child care, only to find out that the FSA sum is added back to income and taxable.  Of course, how are you supposed to know at the time you elect to participate in an FSA what your tax filing status will be 15 months later? ... View more

IRS rules/directions for form 2441. So how do I get TT to correct its program so it will fill out the 2441 correctly for someone filing MFS with a child not claimed as dependent, but who should be a qualifying person for child care expenses covered by an FSA. ... View more